This item was published during the term of a previous administration that ended in April 2007
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Funding doubles to help young firms grow
31/10/2003
Small and growing businesses are set
to benefit from a huge increase in support for an
innovative venture capital scheme.
The successful £20 million Scottish
Co-Investment Fund (SCF) is to receive an additional £24.7
million from the European Regional Development Fund.
Making the announcement at the
Institute of Directors Scotland Conference in St. Andrew's,
Enterprise Minister Jim Wallace said:
"The venture capital now
available to young, growing companies under the Scottish
Co-Investment Fund has doubled.
"All public money in the SCF is
expected to be match funded by the private sector - so the
£45 million now available will become £90 million in total.
This adds up to a good deal for Scottish companies and for
the Scottish economy.
"On the basis of agreed business
plans, firms can access venture capital under SCF by
contacting the supported Fund Managers.
Venture capital is a form of investment
funding for business which can be used to support the
growth and expansion of the business - for plant and
equipment, premises, new product and services development,
or expanding into overseas markets.
Accessing venture capital can accelerate the
growth of the business and with the right backing, firms
with ambition and vision can reach their full
potential.
"Since the SCF was launched last
November, the response has been excellent - 15 fund manager
partners are now signed up and eight investments have been
made in businesses ranging from biotechnology to
software.
"Iamdelightedto seethatthe European Commission has now recognisedtheimportanceand potential of thisinitiative to stimulate the venture capital market
and provide a professional partnership with the private
sector.
"Creating the right conditions for
entrepreneurship and business growth is critically
important for our long-term economic success.
This will improve the availability of capital and
help to address the 'equity gap' for companies in the early
stages of development."
During his conference speech, Mr
Wallace said he was determined to use his position as
Deputy First Minister to join up Government activity across
Departments in pursuit of long-term, sustainable
growth.
He said:
"Those of you actually running
businesses are the ones who can deliver growth - by
innovating and investing in the skills of your workforce.
But the Executive can play its role by
creating an environment that will encourage enterprise and
allow businesses to thrive.
"There is a solid base on which to
build, with stability at the macro-economic level.
Using this stability and our powers over key
drivers such as transport, business support and skills
development, we can achieve real, long term sustainable
growth for Scotland."
He outlined how the Executive was
acting for the long term by tackling the key factors
essential for improved productivity - physical investment,
innovation, skills and education, and entrepreneurship.
Focusing on transport investment in
particular, Mr Wallace said:
"A transport system that is efficient,
integrated, reliable and safe is crucial to supporting and
encouraging economic growth.
That is why we are investing in improvements
to tackle congestion, funding the development of new rail
links to Edinburgh and Glasgow airports, supporting the
re-opening of the Stirling-Alloa-Kincardine railway, and
completing the trunk road network.
"By 2006, the transport budget will
have expanded to almost £1 billion a year.
The scale of the projects and resources
being committed are evidence of Ministers' commitment to
delivering the infrastucture which business in Scotland
needs to compete."
Under the Scottish Co-Investment Fund,
Scottish Enterprise enters agreements with private sector
partners who are able to demonstrate a track record, and
strong commitment and motivation to early stage 'hands-on'
investments.
Investors can be institutional
investors, professional fund managers, smaller unregulated
fund managers and investors, business angels syndicates and
private individual investors.
SCF will co-invest with existing funds and
investors, as well as with new funds and new investors to
the Scottish market.
Investment decisions are made by these
private sector partners.
The range of SCF support is from
£10,000 to £500,000.
Eight individual deals have been announced
so far worth £4.4m total investment.
To date, 15 Fund Managers have signed up
including Braveheart Ventures, Archangels and the Hamilton
Portfolio.
During 2002, Scottish Enterprise and the Scottish
Executive undertook an extensive review of public sector
early stage equity policy inScotland. Following on from this review, Scottish
Enterprise undertook a four-month consultation with the
equity market in Scotland.
The result of this work was the
establishment of a £40 million early-stage equity
investment package, announced by Iain Gray in August 2002,
comprising three linked products within a support
framework, including the Scottish Co-Investment Fund, a
revised Business Growth Fund, and the Investment Readiness
Programme.
It is recognised that within Scotland
certain areas have a critically lower level of economic
activity than other areas.
This economic under-performance has been
recognised in policy terms by the EC through the adoption
of Objective 2 and 3 status for a number of areas in
Scotland and the establishment of a number of European
Partnership Offices (South of Scotland, East of Scotland
and West of Scotland).
As part of their Operating Plans for
the period 2000-2006, each of these three European
Partnerships has earmarked substantial funds for risk
capital - Southern Scotland £2m, Eastern Scotland £7m, and
Western Scotland £23m.
From these funds, £24.7m is being made
available for the SCF.